I appear to be under fire on twitter for claiming I am investing ethically by purchasing units in the LGIM FutureWorld fund.
I am aware that this fund is not strictly an ethical fund and that my investment isn’t an “ethical investment” according to the definitions dished out by the FCA and reinforced by trade bodies such as the Investment Association and the PLSA.
But as the LGIM Future World fund meets my criteria for ethical investment and my ethics are my own , I will stay with it. I don’t think “ethical” should go the way of “advice” and become the property of regulated experts.
I suspect that the controversy over this fund begins because Pension Bee, that offer FutureWorld on their fund platform, have written to LGIM , asking for an explanation as to why the fund invests in Shell.
Can we invest money ourselves to meet our ethics?
For most of us , this is unlikely. It is possible to purchase a licence to Morningstar’s Sustainalytics.
It is possible to subscribe to various feeds such as Sarah Wilson’s Minerva, Julia Dreblow’s SRI services orAlan McDougall and Tom Powdrill’s PIRC
With all this research to hand , you could build your own portfolio of stocks and/or funds and claim to be executing your ideas self-suffeciently.
However most of us will need to take advice from an expert if we are to really crack this. It would appear that IFAs like David Penny and Al Cunningham are now expert enough on what is ethical investment, to put themselves forward for this on twitter and I thoroughly recommend them
They do not have any divine rights on “good and evil” so you will have to work out with them how far you want ethics to guide you in your stock or fund selection and to what extent you are going to “outsource execution” to these fine fellows.
For those who want their investments fine-tuned, there is nothing better than an high class IFA like Al or David Penny.
But for the ordinary investor like me….
I have gone another route , a collective route. I have looked at a few funds which claim to do what I want to them and I have selected FutureWorld because I get it at a very good rate, it is convenient for me to use and because the fund managers are round the corner from where I work and I can have a coffee with them from time to time.
Do people know what they want?
When I became an IFA back in the early 1980s , I found that it was easy to sell the Friends Provident Stewardship Fund because the people I talked with were often Methodist Ministers. They were attracted to this fund for obvious reasons.
35 years later, people are still choosing funds out of conviction. I was pleased to see the results of Pension Bee’s research of 2000 of their policyholders. A sample of the findings were posted on Twitter
81% of the respondents stated their desire for transparency around the companies they are invested in and information on their business activities #PensionBeeCustomerVoice
— PensionBee (@pensionbee) January 27, 2020
61% of consumers favoured an active screening approach towards tobacco companies, with 35% requesting outright removal. This was consistent amongst all age groups, but particularly pronounced among women. #PensionBeeCustomerVoice pic.twitter.com/Q5PWltBZZM
— PensionBee (@pensionbee) January 27, 2020
Our research shows there is a growing gap between the views of consumers and the availability of mainstream pension products. 65% of our customers showed a strong preference for pension providers to engage with these companies on their behalf #PensionBeeCustomerVoice
— PensionBee (@pensionbee) January 27, 2020
What these tweets tell me is that many people have strong ethical convictions that drive what they want from their investments.
If Pension Bee are to be believed, their conviction is not being matched by the courage of fund managers which appears to be lacking.
I hope that Pension Bee will find a way to offer funds to their investors that meet their investors expectations so that they do not have to consult with experts.
Because the vast majority of people who invest with Pensions Bee or (like me) in Legal and General Workplace Pensions, rely on Pension Bee and L&G to present them with funds that do what they want.
This is why we have fund governance
While I have found LGIM excellent at providing the fund choices I want, I have (of late) found L&G’s platform governance deficient and I’ve said so both to its executive and to its IGC.
Pension Bee appear to be doing what L&G and their IGC is not doing , which is talking to its savers about what they want.
I may find out in the past few months this has changed, and I look forward to reading the IGC’s Chair’s Statement in April to prove me wrong. But right now I think I prefer Pension Bee’s approach to fund governance and if they offer me better fund governance than L&G, I may move to Pension Bee for LGIM fund management in future.
My ethics are my own, and so is my money!